The legal case of Arsenal Football Club plc v Matthew Reed [2003] EWCA Civ 96 is a leading case about trademark infringement. The defendant in the case, Mr. Matthew Reed, had sold souvenirs outside Highbury during Arsenal home games that bore the registered trademarks of Arsenal FC (namely ARSENAL, ARSENAL GUNNERS, the Cannon device and Arsenal Crest device) for more than 30 years. In January 1999 Arsenal FC started legal proceedings against Matthew Reed. They argued that Mr. Reed had infringed their registered trademarks and had carried out acts of passing off.

The High Court rejected the claim in the terms of passing of. It was mentioned by the High Court that the products sold by Mr. Reed were not noticed as original by his customers because of the disclaimer notices on his stalls. Arsenal FC could not prove that the customers were unable to differentiate between the original product and the ones sold by Mr. Reed. So there was no use of the marks as badges of origin which were causative for the claim of passing off. Additionally, the Court held that the marks were only used as badges of allegiance and loyalty. However, a reference to the European Court of Justice was made to determine whether or not Mr. Reed’s “non-trade-mark” could be a defence.

At first, the ECJ pointed out that Mr. Reed was using a sign in the course of trade which was identical with the trademark registered by Arsenal FC. The ECJ ruled that Mr. Reed’s use of Arsenal’s trademarks was liable to affect the origin function of the mark, and so was indeed trademark infringement. However, in interpreting the ECJ ruling the High Court decided that the ECJ had exceeded its jurisdiction. The High Court had already found that there was no likelihood of consumer confusion in this particular case, and that the ECJ had interfered with the High Court’s finding of fact on this point. The High Court decided that it must apply the ECJ’s principles to its own previous findings of fact, and held to its previous judgment that there was no infringement.

The Court of Appeal heard an appeal of the case and handed down its judgment on 21st May 2003. It held that Mr. Reed’s trading activities did indeed infringe Arsenal’s trademark registrations. The ECJ was quite entitled to rephrase the national court’s questions, and it did so: the issue here was not whether there was “confusion” as such, but whether Mr. Reed’s activities were likely to damage Arsenal’s property right in its trademark registration.

The Court of Appeal stated in its judgment that the ECJ was not particularly concerned with the issue of “trade mark use”: it quite rightly considered the essential function of a trademark, and then went on to rule that activities such as Mr. Reed’s were likely to impair this function, and would infringe the trademark. If Mr. Reed were allowed to continue, then ARSENAL, ARSENAL GUNNERS, the Cannon device and Arsenal Crest device would effectively cease to work as trademarks: it would no longer be able to act as a guarantee that goods bearing the ARSENAL mark came from Arsenal FC. It was held that The High Court had gone too far in stating that Mr. Reed’s use of ARSENAL was not trademark use and so could cause no damage to Arsenal FC.

The Court of Appeal decision was welcome news to brand owners everywhere: the possibility of a “non-trade-mark use” defence could well have eroded the value of many trademarks worldwide, and not only the ones owned by sports clubs. As a result of the victory Mr. Reed was ordered to pay Arsenal’s £175,000 legal bill and ordered to stop selling the unofficial merchandise.

While some may view this as a David and Goliath court battle that sullied the name of Arsenal FC as that of a bully, it is important to understand that merchandise is as important a revenue stream as gate receipts and sponsorship deals. Clubs like Arsenal are fully entitled to protect their intellectual property rights as they did in this case.